SDB Directed Issuance for Acquisition of PAB Shares Approved by Regulators A Signal of Substantial Integration and Good Prospect

2011-06-29

[SZ, China] June 28, 2011 22:00

Shenzhen Development Bank (SDB, SZSE000001) submitted announcement to Shenzhen Stock Exchange today saying that on June 28, 2011 SDB had received CSRC approval for the acquisition of PAB shares through share issuance (the deal). Hence all regulatory approval procedures needed for the deal are completed. The bank will issue about 1.638bn new shares to China Ping An Group (PAG) via non-public offering in exchange for about 7.825bn PAB shares (accounting for about 90.75% of total PAB shares) held by PAG and about RMB2.69bn in cash. After the deal is done, SDB will hold about 90.75% of PAB shares and PAB will become a subsidiary controlled by SDB. PAG and its subsidiaries will hold 2.684bn SDB shares, or 52.38%, and SDB will become a subsidiary controlled by PAG. In the coming few months, SDB and PAB will still run their own businesses independently and there will no impact upon customers/ businesses.

According to previous announcement, next SDB will achieve the final integration of the two banks through approach including but not limited to absorption of PAB. Based on 2011 Q1 financial statements of the two banks, after integration the total assets of the combined bank exceeds RMB1,000bn, with 369 outlets and over 10 million credit cards. Based on pro forma financial statements, 2011 net profit of the merged bank is expected to exceed RMB9.5bn. The combined bank will have stronger capital strengths with its asset quality at the best level among the listed banks. The integration will effectively help the two banks to achieve mutual supplementation and network expansion and to fully leverage the synergy and concentrated resources. The combined bank will better fit in the world-leading one-stop financial service platform of PAG, achieve centralized business management and build its competitiveness through continuous improvement of customer experience and provision of a broader range of financial services.

You may log on SDB official website www.sdb.com.cn or www.cninfo.com to refer to the full text of the announcement. And you may log on SDB official website www.sdb.com.cn to refer to this news release.

SDB will become the only bank in which PAG has a controlling stake

In September 2010 SDB Shareholders approved the proposal about asset purchase through share issuance, i.e. SDB to non-publicly issue about 1.638bn new shares to PAG at RMB17.75 per share in exchange for about 7.825bn PAB shares (accounting for about 90.75% of total PAB shares) held by PAG and about RMB2.69bn in cash. In October 2010, PAG shareholders approved this asset restructuring proposal. On June 28, 2011 SDB received CSRC approval for the deal. Hence all regulatory approval procedures needed for the deal are completed.

After the deal is done, SDB will hold about 90.75% of PAB shares and become the controlling shareholder of PAB. In the coming a few months SDB and PAB will still run their own businesses independently and there will be no changes to customers/ businesses of the two banks. Meanwhile after the deal total issued shares of SDB will amount to about 5.123bn shares, and PAG and its related parties will hold about 2.684bn SDB shares in total, or 52.38%, and become the controlling shareholder of SDB. SDB will become a PAG subsidiary company and the only bank in which PAG has a controlling stake.

SDB says that the deal is an important milestone for the future integration of SDB and PAB. The bank will continue to push ahead with integration of the two banks by means including but not limited to merging PAB through absorption as per relevant laws/regulations and regulatory requirements and will try to get the work done ASAP. After integration the combined bank will have bigger asset scale, larger network and better technology platform and will have better future development. At current stage there is no change to the bank’s businesses/customer services and the bank will continue to provide efficient quality service for customers.

Integration plan is implemented smoothly and adequate preparation has been made for the merger in future

As per regulatory requirements, SDB will achieve the final integration of the two banks through approach including but not limited to merger with PAB. PAG will provide necessary assistance to SDB for the integration. Detailed information related to the integration will be announced in time.

Regarding the timetable of the integration, SDB says that the bank will try to accelerate the process but specific timetable will be subject to regulatory approval and progress of relevant work.

SDB says that SDB and PAB have started relevant planning and preparation in order to facilitate the merger of two banks in future. Given integration of the two banks will involve various aspects such as structure/people/policy/process/system/culture and all businesses, it requires detailed preparation and careful implementation. Through the integration process both banks will properly plan/prepare for the merger following the principles of focusing on customer experience, strengthening internal control, conducting sufficient communication and guaranteeing IT system safety. Based on full understanding/analysis about the status quo of the two banks, colleagues of both banks will choose the better business model which meets future development requirements of the bank, and fully leverage leading products/businesses/management models of the two banks to prepare for the strong growth of the bank in the future.

At the same time, SDB says that integration will only be the work of the bank at a certain stage, and both banks will still focus on business development in the process of preparing for/implementing the integration and the integration will be pushed ahead around the principle of supporting better development in future.

Best Bank strategy emerges and the prospect of the integration is worth expecting

SDB shows great confidence in the combined bank: the combined bank will have a bigger asset scale, larger market share, 369 outlets in 28 cities covering about 80% of PAG customer base. Meanwhile the deal will further deepen the strategic cooperation relation between SDB and PAG/PAG subsidiaries. In future the bank will fully leverage PAG resources, including over 60million consumer customers and over 2 million corporate customers and strong PAG brand/channel/customer/product/IT strengths, to expand cross selling and explore an innovative route of banking business development and try to build a best bank with strong competitiveness in China.

At present, SDB has raised its new development strategy, which is to build market leadership in respect of SME business, Micro Finance, Retail business and overall integrated financial service while maintaining traditional business strengths. On corporate side, the bank will create more products and connect trade finance with online supply chain system to realize online integration of supply chain logistics, fund flow and information flow. Meanwhile the bank will aggressively development cash management business and connect it with trade finance and supply chain to provide better service for SMEs. What’s more, SDB has set up Micro Finance Business Unit for all-round improvement of financial service for micro enterprises. On retail side, the bank will realize more financial product integration through credit card and will fully leverage PAG retail customer resources to achieve blanket financial service for retail customers through cross selling banking/insurance/securities/trust products and march toward the objective of building the bank into the best bank in China recognized by the public.

About SDB

Shenzhen Development Bank (SDB), a national bank headquartered in Shenzhen, is the first joint stock company listed on Shenzhen Stock Exchange (SZSE 000001). As of March 31, 2011, the bank’s total asset has reached RMB 807.6 billion. Through 293 outlets in 20 main cities across China, SDB provides corporate/retail/government customers with various kinds of financial services. At present, Ping An Insurance (Group) Company of China, Ltd. and its subsidiaries hold 1.045 billion SDB shares, representing about 29.99% of total shares of SDB after the NPO.

As China’s first joint stock insurance company, Ping An has developed into a comprehensive integrated financial services group covering insurance, banking, investment and other financial services. As of March 31, 2011, the group’s total asset and net asset have reached RMB 1.231074 trillion and RMB 123.946 billion respectively and over 60 million clients have enjoyed Ping An services in insurance, banking and investment. PAG ranks 147th in “Forbes 2011 Global 2000”, 107th among Financial Times “top 500 of the world” and 383th in “Fortune Global Leading 500”. In financial investment field, Ping An subsidiaries specializing in securities, trust and asset management are taking the lead with excellent performance.

About Ping An Bank

As a cross-regional joint stock commercial bank, Ping An Bank’s registered capital is RMB 8.623 billion. It is headquartered in Shenzhen with the outlets distributing in Shenzhen, Shanghai, Fuzhou, Quanzhou, Xiamen, Hangzhou, Guangzhou, Dongguan, Huizhou and Zhongshan. As of December 31, 2010, the bank’s total asset, total deposit and total loan are RMB 255.8 billion, RMB 182.1 billion and RMB 130.8 billion respectively. Currently, through 76 outlets in 10 main cities across China, Ping An Bank provides corporate/retail/government customers with various financial services.